RKB Agro Industries Ltd Directors Report.

The Members

R K B Agro Industries Limited

Your directors are pleased to present the annual report along with the audited financial statements for the year ended 31st March 2018.

1. Financial results :

31st March 2018 31st March 2017
Particulars Amount in Rs. Amount in Rs.
Gross Revenue from operations 41,64,35,619 50,50,76,886
Other Income 33,56,429 29,31,221
Total Revenue 41,97,92,048 50,80,08,107
Expenditure before depreciation and financial cost 40,46,44,930 49,30,17,450
Depreciation 23,26,839 25,90,406
Financial cost 83,92,264 52,57,924
Profit before tax 44,28,015 71,42,327
Provision for Tax – Current Tax 10,46,542 14,00,000
Mat Credit Set off (1,92,554) -
Deferred tax Charge/ (Income) 1,44,495 (4,94,516)
Tax adjustment of earlier years 21,179 (79,896)
Profit/(Loss) after Tax for the year 34,08,354 63,16,738
Earnings per share – Basic & Diluted 0.45 0.84

The financial statements for the financial year ended March 31, 2018, forming part of this Annual Report, have been prepared in accordance with the Indian Accounting Standards (IND AS) as notified by the Ministry of Corporate Affairs.

2. Operations :

During the year, your companys revenue from operations was Rs. 41,64,35,619/- as against previous years figure of Rs. 50,50,76,886/- Taking into account of other income the total revenue has aggregated to Rs. 41,97,92,048/- as against Rs. 50,80,08,107/- during the previous year. After providing for depreciation, financial cost and tax expenses the operation has resulted in a net profit of Rs. 34,08,354/- as against the previous year profit of Rs. 63,16,738. Due to reduced sales, increased in financial cost and other market conditions the company posted declined net profit for the year 2017-18 as compared to previous year.

3 . Dividend :

With a view to conserve the resources, your Directors have not recommended any dividend for the year 2017-18.demand for cotton, your company would be able to achieve further increase in turnover and the profitability.

4 . Reserves :

The Board does not propose to carry any amount to any reserves; the entire net profit is proposed to be transferred to Balance sheet under the heads of other equity.

5. Brief description of the Companys state of affair :

During the year under review the performance of the company has shown quite low as the volume of traded cotton has gone down from Rs. 50,50,76,886 to Rs. 41,64,35,619 due to unfavorable raining pattern for cultivation of cotton and also volatile market conditions. It was expected that, given a favorable weather conditions conducive for cultivation of cotton and with upward demand for cotton, your company would be able to achieve increased turnover and the profitability.

6. Extract of the Annual Return :

The extract of annual return in for MGT-9 as required under the provisions of Section 92 (3) of the Act is attached as Annexure A to this report.

7. Directors and Key Managerial Personnel :

A. Directors :

There are no changes in the composition of board of directors. Sri Sowbhagraj Bhandari, Director retire by rotation at the ensuing annual general meeting and being eligible offers himself for re-appointment. The composition of the Board of Directors and the number of board meetings attended by them as follows:

Sl. Name of Director Designation Qualification No.of meeting attended
1 Sri S.K. Bhandari Managing Director B.Com 09
2 Sri V.M. Bhandari Whole-time Director B.Com 09
3 Sri Shantilal Moota Independent Director Matriculate 06
4 Sri M. Ganesh Independent Director MBA 06
5 Mrs. Rupal Bhandari Woman Director BBM 09

During the financial year 2017-18, nine board meetings were held on 30-04-2017, 20-06-2017, 24-06-2017, 23-08-2017, 31-08-2017, 30-11-2017, 13-12-2017, 23-01-2018, and on 08-02-2018 and the intervening gap between any two meetings was within the period prescribed in section 173 of the Companies Act, 2013.

B. Key Managerial Personnel :

As required under section 203 of the Companies Act, 2013, apart from the Managing Director the following are the Key Managerial Personnel.

Sri. S. Sooraj Soni Company Secretary
Sri. Sripad Hanchate Chief Financial Officer

C. Declaration by Independent Director(s) :

Sri Shantilal Mootha and Sri M. Ganesh, Independent Directors have furnished declaration to the effect that they meet the criteria of independence as provided in subsection (6) of Section 149 of the Companies Act, 2013.

8. Audit Committee :

The Audit Committee constituted by the Board consists of the following directors:

Sri Shantilal Moota Independent Director Chairman
Sri M. Ganesh Independent Director Member
Sri V. M. Bhandari Whole-time Director Member
Sri Sripad Hanchate Chief Financial Officer Convener

Vigilance Mechanism :

The Company has established a vigil mechanism and overseas through the committee, the genuine concerns expressed by the employees, stakeholders and other Directors. The Company has also provided adequate safeguards against victimization of employees and Directors who express their concerns. The Company has also provided direct access to the Chairman of the Audit Committee on reporting issues concerning the interests of co employees and the Company.

9 . Adequacy of internal financial controls with reference to the Financial Statements :

The internal financial controls are adequate to ensure that the financial statements are drawn up with due care to reflect the factual position. Further pursuant to section 138 the Companies Act, 2013; the company has appointed M/s. Motha S.K. & Co., Chartered Accountants, Loharwadi, Raichur- 584101 as the Internal Auditor for the Company.

10. Composition of Nomination and Remuneration Committee and its policy.

The Nomination and Remuneration Committee consists of the following members:

Sri. Shantilal Mootha Independent Director Chairman
Sri. M. Ganesh Independent Director Member
Mrs. Rupal Bhandari Director Member

The number of director on the Board of the Company is only five out of which two are independent directors. The Audit Committee and Nomination and Remuneration have been constituted amongst them however ensuring compliance with the provisions of the Act.

The Company has drawn up the remuneration policy considering the various parameters prevalent in Raichur district, one of the backward districts in Karnataka State. Further the remuneration fixed for the Managing Director and the Whole-time Director, the core promoters of the company is meager and so also the remuneration offered to other Key Managerial Personnel.

11. Managerial Remuneration:

1) The ratio of the remuneration of Managing Director and the Whole-time Director to the median remuneration of the employees of the Company is 1:3. None of the Directors are paid any commission.

2) During the year under consideration Sri. S K Bhandari, Managing Director and Sri. V M Bhandari, Whole-time Director have been paid a remuneration of 7,80,000/- p.a. each, increase from Rs. 7,20,000/) 3) The percentage increase in the medial remuneration of the employees in the financial year is 5%. 4) The number of permanent employees on the role of the Company is 12. The company is situated in a backward district and considering the relevant parameters and in view of the fact that there is no increase in the remuneration to CFO and Company Secretary. and accordingly information under Rule 5 (viii) of Companies (Appointment and Remuneration Personnel) Rules, 2014 is not furnished. The remuneration paid to KMPs is as per the remuneration policy of the Company

12. Change in the nature of business :

There is no change in the nature of the business.

13. Subsidiaries, Joint Ventures and Associate Companies :

There are no Subsidiary / Joint Venture & Associates Companies during the year .

14. Particulars of Loans, Guarantees or Investments :

The Company has, during the year not given any loan, provided any guarantee and made any investments falling within the purview of section 186 of the Companies Act, 2013.

15. Particulars of contracts or arrangements with related parties :

Details of related party transactions attracting the provisions of section 188 of the Companies Act, 2013 is provided in form AOC 2 as Annexure B to this Report.

16. Share Capital :

The paid up share capital of the Company stands at Rs.7,50,00,000/- (Rupees Seven crores and fifty lakhs only) consisting of 75,00,000 equity shares of Rs. 10 each.

17. Risk Management Policy :

The Company has drawn up a Risk Management Policy. The Board constantly reviews the policy to ensure that the fluctuation in market price for cotton would not impact the performance of the company. Also the raining pattern including possibility of any drought / deluge is studied which would adversely affect the cultivation of cotton. This exercise is done periodically for drawing up alternative plan to overcome the situation.

18. Fixed Deposits :

During the year under report, the Company has not invited / accepted / renewed any fixed deposit from public attracting the provisions of section 73 of the Companies Act, 2013, read with Companies (Acceptance of Deposits) Rules, 2014.

19. Listing with Stock Exchanges :

As per the requirement of listing agreement with Bombay Stock Exchange Limited, Mumbai your directors hereby declare that with regard to listing of shares there is no change in the status of discontinuance during the current year. Your Company is making all out efforts to secure the approval of the said Exchange for relisting of the securities and it is expected that it should materialize early.

20. Depository system :

As on 31st March 2018, 25,46,890 equity shares representing 33.96 % of total paid up equity share capital of the Company have been in dematerialized.

21. Mechanism for formal Board evaluation :

Every Director is requested to evaluate the effectiveness of the Board and identify the areas of improvement and to evaluate the Board dynamics and inter-personal relations, inflow of information, decision making capacity and inclination of each director. The Board also constantly evaluates the contribution of the members and shares the information. The performance of independent directors is evaluated with reference to their ability to contribute and monitor corporate governance practice, effective participation in the long term strategic planning and commitment to their obligation and fiduciary responsibilities, including participation in Board meetings and committee meetings.

22. Directors Responsibility Statement :

Pursuant to section 134 (5), your Directors state:

(a) That in the preparation of Annual Accounts, the applicable accounting standards had been followed along, with proper explanation relating to material departures; (b) That they had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit or loss of the company for that period; (c) That they had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; (d) That they had prepared the annual accounts on a going concern basis.

(e) They have laid down internal financial controls and compliance with the provision of all applicable laws and that such systems were adequate and operating effectively.

(f) That they had devised proper systems to ensure compliance with the provision of all applicable laws and that such systems were adequate and operating effectively.

23. Corporate Governance :

A report on Corporate Governance is attached to this report as Annexure C.

24. Auditors :

Pursuant to the provisions of Section 139 of the Companies Act, 2013 and the rules made thereunder, M/ s Ganapath Raj & Co, Chartered Accountants, Bangalore (Firm Registration No 000846S) who were appointed as Auditors of the Company for a term of 5 years from the financial year 2017-18 to till the conclusion of the Annual General Meeting of the financial year 2021-22.

25. Auditors Report :

Explanations or comments by the Board on the qualification, reservation or adverse remark or disclaimer made by the auditor are detailed bellow:

Ref. to Audit Report Qualification / reservation / adverse remark / disclaimer Explanation / comments by the Board
Basis for qualified opinion (ii) The company has not ascertained from the creditors as to whether they are registered as Micro or Small Enterprise under Micro Small & Medium Enterprises Development Act, 2006 and as such the particulars of dues, if any accrued to such enterprises is not determined and provided for. Consequential impact on profit for the year and Trade payables as at the yearend is not ascertainable. The Company has large no.of creditors and they are all cotton growing farmers who are not required to register under Micro Small & Medium Enterprises Dev.Act, 2006. With regard to other entities action initiated to ascertain the applicability of the said Act. However this will not have any impact on the profit for the year and the trade payables.
Report on other legal and regulatory requirements (iii) The Company has accounted the Retirement Gratuity on cash basis as against actuarial valuation basis as envisaged in AS-15 notified under Rule 7 if the Companies (Accounts) Rules, 2014 an disclosure required under this standard is not disclosed. Consequential impact on the accounts is not scertainable. Action is being taken to get the actuarial valuation done as envisaged in AS-15.

26. Secretarial Audit Report :

The Secretarial Audit Report pursuant to section 204 of the Companies Act, 2013 is attached as Annexure D to this Report.

27. Corporate Social Responsibility :

Your Company does not fall under the purview of eligibility criteria as defined under the provision of section 135 of the Companies Act, 2013 and hence the provisions of CSR are not applicable to the Company.

28. Maintenance of Cost records :

Pursuant to section 148(1) of the Companies Act, 2013 and Rules made thereunder, maintenance of cost records has not been prescribed by Central Government hence it is not applicable.

29. Prevention of Sexual Harassment at Workplace:

As per the requirement of the Sexual Harassment of Women at Workplace (Prevention, Prohibition & Redressal) Act, 2013 (‘POSH Act) and Rules made thereunder, your Company has constituted Internal Complaints Committees (ICC) and also states that there were no complaints reported/filed under the said Act.

30. Conservation of energy, technology absorption and exchange earnings and outgo : i. Conservation of energy : Statement attached as Annexure E to this report. ii. Technology absorption :

The activity of the company is agro based and the operation being medium in size the company has not at present made any efforts in technology absorption. iii. Foreign Exchange Earnings and out flow:

There is no Foreign Exchange in flow/ out go during the year under review.

31. Acknowledgements :

The Board of Directors place on record its appreciation of the continued support provided by the Bankers, stakeholders, valued customers, suppliers, employees at all levels and the Government and Local Authorities in conducting the Business activities of the Company

On behalf of R K B Agro Industries Limited
Date : July 30, 2018
Place: Raichur S.K. Bhandari V.M.Bhandari
Managing Director Whole-time Director
DIN: 00409750 DIN:00411146